Credit card instalments: interest explained

What does instalment repayment (revolving) mean?

With instalment repayment (Teilzahlung), you do not pay off your monthly credit card statement in full, only a minimum payment. The rest is carried over to the following month and charged interest. Because the credit line fills up again with every repayment and you can keep using the card, this is called “revolving” credit.

The minimum payment is usually a small percentage of the outstanding balance with a fixed minimum amount. The contracts in our comparison include, for example, 2.5% (at least €30), 2.8% (at least €9.10) or 10% (at least €15). The lower the minimum payment, the more comfortable the monthly burden seems – and the longer the interest keeps running.

Instalment repayment only exists with genuine credit cards that have a credit line. Charge cards always collect the statement in full, while debit and prepaid cards charge your account or balance immediately. With these card types, no interest debt can arise at all.

How expensive instalments are: the interest rates in our comparison

In our comparison, the effective annual interest rates (APR) of cards with an instalment option range from around 10% to just under 26% (as of October 2026). The median is just over 21%, and more than two thirds of the cards charge over 20%. That is many times what an instalment loan costs if you have a decent credit rating.

Free credit cards in particular are often at the upper end. That is no coincidence: the card itself is free, and the money is made from interest and foreign currency fees. If you pay the statement in full every month, you can still use such a card without paying a cent.

Borrowing rate and APR: what you should compare

Your card contract states two interest rates. The fixed or variable borrowing rate (Sollzins) is the annual rate the bank calculates with; it is charged monthly, pro rata, on the outstanding balance. The effective annual interest rate (APR, effektiver Jahreszins) also takes into account that the interest charged each month itself earns interest. It is therefore always slightly higher, and it is the right figure for comparing cards.

An example: an APR of 20% corresponds to a borrowing rate of around 18.4% a year, or just over 1.5% a month. On an outstanding balance of €1,000, that means around €15 in interest in the first month.

Also check when interest starts to run. Each contract sets its own rules: with some cards, the period until the direct debit date stays interest-free; others charge interest from the transaction date as soon as you do not pay in full. A few cards in our comparison have no interest-free days at all. For cash withdrawals, interest often runs from the day of the withdrawal.

Worked example: €1,000 outstanding balance

How much instalment repayment costs depends mainly on how quickly you pay it back. Suppose €1,000 is outstanding on your card and you make no further purchases. The table shows the duration and interest costs of four repayment approaches at three interest rates that appear in our comparison.

Watch out: instalment repayment is often the default

With some credit cards, instalment repayment is activated by default: only the minimum payment is collected, and interest is automatically charged on the rest. Other providers do not collect anything by direct debit at all but expect a bank transfer – if you transfer less than the full amount, the rest becomes an instalment balance. If you overlook this, you pay interest even though there would be enough money in your account.

So check how repayment is set up as soon as you receive the card, and check the first few statements. If they show a minimum amount instead of the full balance, or a remaining amount is carried over, instalment repayment is active.

How to switch to full payment

A few steps are all it takes to avoid the interest trap completely:

• Switch repayment to 100% or full repayment in online banking or the app
• If the app does not offer this, request it from the provider by message or phone and have the change confirmed
• Set up a direct debit for the full statement amount – or a standing order or a reminder if the provider only accepts bank transfers
• Check the first statement after the switch: no remaining balance should be carried over
• Make deliberate use of the interest-free period until the direct debit date as a liquidity advantage

If you already have an outstanding balance: how to get out

If a larger amount has already built up, one thing helps above all: repaying faster. With credit cards, you can usually pay back more than the minimum payment at any time, for example by bank transfer to the card account. Every extra euro reduces the interest from the following month.

• Set a fixed monthly payment well above the minimum payment and transfer it by standing order
• Stop using the card until the balance is paid off – new purchases extend the repayment period
• Consider refinancing: an instalment loan (Ratenkredit) with a lower APR pays off the card balance and has a fixed end date
• Compare the overdraft (Dispo) on your current account too – paying off the card this way should not cost more than the card itself
• If you are struggling to pay, turn to free debt counselling (Schuldnerberatung) early, for example at consumer advice centres (Verbraucherzentralen) or welfare organisations

Frequently asked questions about instalments and interest

Can I switch off instalment repayment at any time?

As a rule, yes. Most providers let you switch to full repayment in online banking, in the app or on request. Any balance already outstanding then has to be paid in full with the next statement – if you do not have enough money for that, pay back as much as you can first.

Is paying a credit card in instalments more expensive than an instalment loan?

Usually by a wide margin. In our comparison, the APR for instalment repayment ranges from around 10% to just under 26%, and most cards charge over 20%. If you have a decent credit rating, an instalment loan usually costs noticeably less and has a fixed term. Before refinancing, still compare the APR and any additional costs.

What happens if I don't pay the minimum payment?

Then you are in payment default. The bank sends reminders, can charge default interest and reminder fees and, if the default continues, terminate the card contract and demand the entire balance at once. Undisputed claims for which you have received several reminders can lead to a negative entry with SCHUFA, Germany's main credit bureau. Contact the provider early if you cannot make a payment.

Are there credit cards with no instalment risk at all?

Yes. Charge cards always collect the monthly statement in full, debit cards charge your current account immediately, and prepaid cards only work with a balance. With these card types, no instalment interest can arise.